New Residential Investment confidentially filed a draft registration statement with the Securities and Exchange Commission confirming its intention to outsource the NewRez subsidiary in an IPO, the company said.
"Management had discussed this possibility in its third quarter earnings call, so this filing is no surprise," said Bose George, analyst at Keefe, Bruyette & Woods, in a note on the move. "It was at this point that the company also realized that an IPO could positively impact New Residential's valuation as a mortgage lender could trade at a premium at book value."
Common stock of New Residential, a real estate mutual fund that also owns mortgage-backed securities, traded at 80% of its book value in the third quarter of $ 10.86 per share, before opening on November 20, George said. (Read the full story here.)